Financial News

Sainsbury's Sees Pre-Tax Profit Up 2.5%

Supermarket chain Sainsbury's has reported like-for-like sales for the half year rise by 1.7%, with pre-tax profit up 2.5% at £405m.

Revenue, excluding VAT and fuel, for the six months to September 29 was up 4% at £12.16bn.

Total sales in the period were 4% higher at £13.365bn.

In early trading shares in the company were down 0.85%.

The profit boost for Britain's third largest supermarket chain was helped by the development of its online and convenience stores business, the two fastest growing grocery sub-sectors.

Sainsbury's, which has enjoyed 31 consecutive quarters of underlying sales growth, has continued to outshine industry leader Tesco.

Last month Tesco posted a 12.4% fall in first-half UK trading profit. Asda, the second largest in the market, is due to report its third quarter figures on Thursday.

Chief executive Justin King told Sky's Eamonn Holmes: "If you compare our performance with all our major competitors, we are currently doing the best, both in terms of sales and profit - and it is that combination that is important."

"The only way to grow profit at the moment is serving more customers and selling more groceries, and that is what we have done."

Mr King said that the firm would employ around 20,000 temporary staff during the Christmas period, and said habits are changing with festive spending.

"One of the changes we are seeing in customer shopping behaviour now is that they are spreading the cost of Christmas over a longer period of time."

Sainsbury's said consumers continue to be shrewd when it comes to purchases, with "customers putting on average one fewer item in their basket".

The chain has expanded its convenience store business by 20%, year-on-year and has made plans to further target customers who use the Nectar card, in the previously announced joint venture - Insight 2 Communication (I2C) - with loyalty programme owner Aimia.

Meanwhile, Mr King told Holmes consumers can have a say on the thorny issue of multinationals failing to pay UK corporation tax.

"I think customers have to understand that they can vote with their wallets," he said.

"If they believe that the companies that they are doing business with are not paying an appropriate level of tax and those companies have competitors who are, then they can switch where they spend their money."